Mr Pennycook, who was previously finance director, had been standing in as chief since March when predecessor Euan Sutherland walked out, claiming the group was ungovernable as he tried to push through reforms in the teeth of opposition.

Last weekend, however, the mutual’s members voted to approve a radical package of changes and Mr Pennycook has now accepted the chief executive role on a permanent basis.

The food-to-funerals group reported a record £2.5billion loss for 2013 as it was dragged down by the near-collapse of its banking arm but said yesterday it had seen an overall return to profit.

The group reported income of £116million for the six months to July 5, compared with a £1billion loss for the same period last year, despite revenues falling from £5.3bn to £5.1bn.

However, these figures include profits from the group’s farms and pharmacy operations, which have now been sold to ease its debt burden, plus last year’s major losses from the bank and one-off gains from pensions reclassifications.

Stripping out all of these factors, the group saw a £9m pre-tax loss for the first half this year.

Mr Pennycook said yesterday: “I am delighted to have the chance to lead the Co-operative Group through the crucial job of rebuilding the business.

“We have taken major steps forward over the last six months, securing governance reform and repairing our balance sheet, but we have much to do to return the group to full financial health and improve the performance of our businesses.”

: : The East of England Co-operative Society, which is based at Wherstead, near Ipswich, and operates across north Essex, Suffolk and Norfolk, is a separate organisation and not part of the Co-op Group.